At a Glance

• The Kurdistan Region is consolidating 94 government banks as part of a wider banking sector restructuring.
• Only four banks will remain in central Slemani during the current phase of the merger.
• The National Bank is expected to eventually bring the remaining government banking operations under one institution.
• Authorities aim to complete the merger and accounting procedures across Slemani by the end of 2026.

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The Kurdistan Region is undertaking a major restructuring of its government banking system, with dozens of state banks being consolidated ahead of the planned expansion of the National Bank.

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Key Statements and Focus Area

• Slemani Consolidation: "We are continuing the process of integrating and merging the banks. Only the banks of Bakhan, Azmar, Slemani, and Tanjaro will remain in central Slemani." — Hersh Tahir, Director of Slemani Bank 1, to Channel8.
• Completion Timeline: "The committee expects the entire bank and accounting-unit merger process across Slemani Governorate to be finalized by the end of this year." — Zmnako Mahmood, Member of the Inspection Board for Private and Public Banks, to Channel8.
• Focus Area: The restructuring is designed to consolidate government banking operations under the National Bank while reorganizing accounts, debts, and surplus staff.

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The restructuring extends beyond central Slemani to other parts of the Kurdistan Region, with different arrangements being implemented depending on local banking needs.

Malkandi Bank will temporarily remain operational because a significant number of retirees still receive cash payments through its offices. Penjwen and Bashmakh banks will also remain in place, while Garmian and Parwezkhan banks continue operating in Garmian.

In the Raparin Independent Administration, Kewarash Bank and Ranya Bank have been consolidated under Ranya Bank. Qaladze Bank remains operational because of the Kele border office. In Chamchamal, Charmu Bank has been incorporated into Chamchamal Bank. Sharazoor Bank is being merged with Sayid Sadiq Bank, while Halabja Bank will remain unchanged. Tanjaro Bank has been integrated into the Slemani Traffic Directorate to handle traffic-related revenue collection.

The restructuring also covers specialized financial institutions. Five specialized banks in Slemani have been consolidated into one, while a specialized bank continues operating in Halabja. A major administrative challenge is the transfer of customer records. Some state banks hold up to 95,000 individual citizen accounts, meaning account data and balances must be carefully audited and transferred.

Government banks in Slemani, Halabja, Garmian, and Raparin also hold around 100 billion Iraqi dinars in outstanding loans owed by business owners and investors. These financial obligations must be addressed as part of the wider restructuring. The workforce presents another challenge. Authorities estimate around 1,000 surplus bank employees in the current restructuring, while a standard bank generally requires between 70 and 80 employees.

The Ministry of Finance and Economy has allowed employees to voluntarily transfer to other ministries. Remaining staff will be retained according to operational requirements and professional qualifications, with surplus employees eventually reassigned to other government institutions.

Channel8 has learned that some employees oppose transfers because bank workers currently receive 15 monthly payments annually, compared with 12 payments in other government institutions. Moving outside the banking sector would mean losing the additional three payments, potentially affecting nearly 5,000 bank employees across the Kurdistan Region.

The wider consolidation began in November 2025 but was temporarily suspended by authorities in Erbil before resuming following the issuance of an official ministerial decree.

The final restructuring requires extensive accounting work, including the transfer of customer records, reconciliation of accounts, and settlement of outstanding financial obligations before the new banking structure can fully operate.

FYI

The consolidation follows a broader change in the role of government banks after public-sector salary payments began shifting to private banks through the MyAccount project. This reduced the need for a large network of government banks that had traditionally been used to distribute salaries and pensions.

The restructuring therefore involves more than closing or merging branches. Authorities must migrate large numbers of citizen accounts, reconcile government revenues and expenditures, settle outstanding loans, and reorganize thousands of employees before the remaining institutions can operate within the National Bank structure.

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